The Financial Stability Board was established in April 2009 on occasion of the G-20 London Summit, as the successor of the pre-existing Financial Stability Forum. Its aim is to promote the stability of the international financial system, improve the functioning of the financial markets, and reduce systemic risks, through the exchange of information and international cooperation among supervisory authorities, central banks, and supra-national organisations. 

Brief history

On occasion of the Bonn summit in February 1999, the Finance Ministers and Central Bank Governors of the Group of Seven (G-7) countries agreed – as recommended by then Bundesbank Chairman Hans Tietmeyer  –  to establish an institutional entity charged with facilitating cooperation between national and supra-national regulatory and supervisory authorities, called Financial Stability Forum (FSF). The first meeting of the new group was held in Washington, in April 19991.
In November 2008, at the Washington summit, the Heads of State and Government of the G-20 called for an expansion of the FSF, both in terms of the number of participants and mandate, to improve its effectiveness in safeguarding the stability of the financial system2.
New members joined the Forum at the London plenary summit of 11 and 12 March 2010, including the European Commission, Spain, and a large number of still unrepresented emerging countries of the G-20 (Argentina, Brazil, China, India, Indonesia, Korea, Mexico, Russia, Saudi Arabia, South Africa, and Turkey).
In April 2009, with the final communiqué of the G-20 London Summit, the FSF’s mandate was extended (see below) and its name was changed to Financial Stability Board3.  The FSB’s inaugural meeting was held in Basel on 27 June 2009.  


According to article 2 of the Charter, the mandate and tasks of the FSB include:

- assessing vulnerabilities affecting the global financial system, and identifying and reviewing the regulatory and supervisory actions needed to address them;
- promoting coordination and information exchange between authorities responsible for financial stability;
- monitoring and advising on market developments and their implications for the regulatory policy;
- advising on and monitoring best practice in meeting regulatory standards;
- undertaking joint strategic reviews of the policy development work of international standard setting bodies;
- setting guidelines for and supporting the establishment of supervisory colleges;
- managing contingency plans for cross-border crisis management, in particular when systemically relevant institutions are involved;
- collaborating with the International Monetary Fund (IMF) in conducting early warning exercises.

The members of the FSB commit themselves to pursuing the maintenance of the financial system stability; guaranteeing its openness and transparency; implementing international financial standards, including the so-called 12 key International Standards and Codes4.
Moreover, they agree to undergo periodic peer reviews, also based on evidence and data presented by the IMF and the World Bank in their public Financial Sector Assessment Program (FSAP) reports. 

Structure and governance 

The FSB currently consists of four internal structures: the Plenary Board, the Steering Committee, the Chairperson, and the Secretariat.
The Plenary Board is the decision-making body of the FSB and is formed by representatives of the institutions listed in Table 1 (see below). It meets at least twice a year, normally in March and September; additional extraordinary meetings may be called by the Chairperson as circumstances arise. 

                                                                                      Members of the Financial Stability Board
The Steering Committee is charged with implementing the decisions taken by the Plenary Board; its composition is decided by the Plenary Board, so as to ensure balanced representation and operational effectiveness.
The FSB Chairperson is appointed by the Plenary Board for a term of three years, renewable only once. The Chair convenes and chairs the meetings of the Plenary Board and of the Steering Committee; it represents the Board externally; it takes all decisions and acts as necessary to achieve the objectives of the FSB, in accordance with the directions given by the Plenary Board. Since 2006, the FSB has been chaired by Mario Draghi, Governor of the Bank of Italy; he was preceded as Chairman by Andrew Crockett  (1999 / 2003) – then General Manager of the Bank for International Settlements (BIS) – and Roger W. Ferguson (2003 / 2006), then Vice Chairman of the Board of Governors of the Federal Reserve.
The FSB Secretariat is located in Basel, at the BIS.
According to Article 11 of the Charter, the Plenary Board may establish Standing Committees and working groups to support the FSB’s mission; Annex B of the Charter establishes three Standing Committees (Standing Committee on Assessment of Vulnerabilities, Standing Committee for Supervisory and Regulatory Cooperation, Standing Committee for Standards Implementation), and three working groups (Cross-border Crisis Management Working Group, Expert Group on Non-cooperative Jurisdictions, Working Group on Compensation)5


Over time, the activity of the FSB has embraced several fields of action:
- Compensation Practices
- Credit Risk Transfer (CRT)
- Crisis Resolution
- Enhanced Disclosure
- Highly Leveraged Institutions (HLIs)
- Implementation of Standards
- Market and Institutional Resilience
An updated archive of the FSB’s publications on each of the issues listed above is available from the FSB’s website (, “Publications by category” section).
The financial crisis has contributed to focusing the Board’s reflections in particular on issues tied to remuneration, the improvement of standards, and the governance of markets and institutions.
In 2009, the “FSF Principles for Sound Compensation Practices” were published, and intended to reduce incentives towards excessive risk taking that may arise from the structure of compensation schemes. The publishing of the “Principles”, in April, was followed in September by the “Implementation standards”. The implementation of the “Principles” is regularly monitored by the FSB. 
Also in April 2009, the “FSF Principles for Cross-border Cooperation on Crisis Management” were published, aimed at encouraging cooperation between member-state supervisory agencies, central banks, and finance ministers, both in preventing and managing financial crises. The note “Exit form Extraordinary Financial Sector Support Measures” followed in November, on the exit from the exceptional financial sector support measures introduced since 2007:  the note was discussed at the meeting of the G20 Finance Ministers and Central Bank Governors in St. Andrews (UK) on 6 and 7 November 2009.
Lastly, the breadth of the reflections made as of 2009 by the FSB – in some cases jointly with other supranational agencies – is worthy of note: they are on the issue of improving financial stability, with particular reference to the themes of pro-cyclicality (see for instance the “Report of the Financial Stability Forum on Addressing Procyclicality in the Financial System”, April 2009), information (“The Financial Crisis and Information Gaps”, published jointly with the International Monetary Fund Staff in October 2009), and systemically relevant institutions (“Guidance to Assess the Systemic Importance of Financial Institutions, Markets and Instruments: Initial Considerations”, November 2009).  
On behalf of the G-20, the FSB regularly monitors all the progress made in terms of the reform of the international regulatory framework.

1FSF member institutions included the national supervisory agencies of Australia, Canada, France, Germany, Japan, Hong Kong, Italy, the Netherlands, the United Kingdom, Singapore, the United States, and Switzerland. Other international organisations also took part in the Forum (World Bank, ECB, BIS, IMF, and OECD), together with the main international standard-setters (Basel Committee, IOSCO, IASB, etc.).
2The summit’s final communiqué declares: “The Financial Stability Forum (FSF) must expand urgently to a broader membership of emerging economies, and other major standard setting bodies should promptly review their membership. The IMF, in collaboration with the expanded FSF and other bodies, should work to better identify vulnerabilities, anticipate potential stress, and act swiftly to play a key role in crisis response” (“Declaration, Summit on Financial Markets and World Economy”;  November 15, 2008).
3See the Annex to the summit’s final communiqué, “Declaration on Strengthening the Financial System - London Summit, 2 April 2009”.
4By initiative of the FSF, and with the collaboration of the international standard-setters that are part of it, a Compendium of Standards has been drawn up which lists 12 standards considered as deserving priority implementation. The standards identified are relevant in three policy areas: Macroeconomic Policy and Data Transparency, Institutional and Market Infrastructure, Financial Regulation and Supervision
5A description of the objectives of the three Standing Committees is provided in the press release issued following the FSB’s inaugural meeting (“Financial Stability Board holds inaugural Meeting in Basel”, 27 June 2009). A brief summary of the progress made by the Standing Committees is offered in the document “Overview of Progress in Implementing the London Summit Recommendations for Strengthening Financial Stability – Report of the Financial Stability Board to G-20 Leaders” (25 September 2009).

Editor: Maria Giovanna CERINI